India - the Next Economic Powerhouse

Copyright (c) 2008 Paul Hatamember of the General Agreement on Tariffs and
With a GDP growth rate of 9.4% in 2006-07, India'sTrade (GATT). Needless to say, as India's economy
economy is among the fastest growing in thestarts to relax its laws on foreign investment, many
world.India's GDP is over US$1 trillion with a per capitainterested parties who see the light at the end of the
income of US$977 while its per capita (Purchasingtunnel began funneling in their funds.
Power Parity) is US$2700.With China, we know that manpower is the main pulling
With the new open door policy, investment in India haspoint. The same goes for India. India is one of the
become a popular choice, giving China a fair fight forcountries in the world that provided a cost-effective
the share of global investments. India, however, is lesslabor force and an abundance or raw material, mostly
aggressive and a more conservative countrytextile related. India's textile industry is a whopping $36
compared to many other developing countries in Asiabillion dollar industry, a huge lion share for a developing
particularly China.country. Investment in India's textile industry is a sound
Before 1991, India's government had in place red tapesinvestment deal as it contributes up to be about 5% of
and taxes that discouraged outside interference in theirits GDP!
economy and growth. Fearing for the local industries,India's labor-intensive market is highly-trained and
the Indian government protected its weak economy byattracts many foreign investments. Granted, many
putting in place a big tax percentage on importedlow-income groups of Indians are home-trained in it, as
materials and discouraging attempts by foreignan India investor, it is best to take note of this fact.
investors when they showed an interest in dabbling inEvery country has its own expertise and skills. India is
promising companies in India. If they were to grow, Indiaa country with a healthy number of people capable of
wanted it to be from their own effort and not from theruling the textile industry in Asia...the only other Asian
fact that anyone helped them to achieve the success.country running alongside it in the textile industry and
Therefore, investment in India was difficult before 1991.fighting for the same slice of the market is China.
But the country is completely different today becauseWhile both countries fight for the lion share of the
it plays a big role in general meetings all around theindustry, the fierce competition between China and
world that dealt with world economy via the WorldIndia will only benefit foreign investors in India's textile
Trade Organization. India is an active and foundingindustry.